Shares of Greater Manchester-based Revolution Bars Group plc rose about 14% on Thursday after it published a stock market update on its reopening plans saying the UK Government’s plan to lift lockdown restrictions and the extra support announced for the hospitality sector in the Budget means “the light at the end of the tunnel is getting brighter.”
The company said it anticipates that following the easing of restrictions there will be significant pent-up demand and the group will enjoy a “rapid rebound” in trading.
“Revolution Bars Group plc, a leading operator of 66 premium bars, trading under the Revolution and Revolucion de Cuba brands, notes the comments by the Prime Minister, Boris Johnson on 22 February 2021, and the subsequent support announced by the Chancellor, Rishi Sunak, in the Spring Budget on 3 March 2021,” said the company.
“Although the date that we will be able to commence the reopening of our estate externally on 12 April 2021 is later than we had hoped, the clarity that has been provided by the plan to lift lockdown restrictions enables us to fully prepare and manage the expectations of our colleagues.
“Initially, on 12 April 2021, the company intends to open 20 bars, and with the opening of indoor hospitality on 17 May 2021, all 66 bars will reopen.
“The subsequent additional support announced for the hospitality sector by the Chancellor in the Spring Budget on 3 March 2021, particularly the restart grants, continued reduction in business rates, low VAT on food and non-alcoholic drinks and other measures are also welcome.
“This support will give further certainty to all our stakeholders and allow the company, together with the wider hospitality industry, to regain a financial position from which it can again develop and thrive.
“In December 2020, the group estimated that if it were unable to trade due to enforced closure because of the pandemic and taking into account the various Governmental support schemes and its agreements with landlords, the company’s cash burn would be approximately £0.4m-£0.45m per week.
“At that time, the group had £17.6m of liquidity headroom.
“At 3 March 2021, the group had net debt of £27.1m with available liquidity resources of £9.8m, as a result of the weekly cash burn detailed above and following the cash outflows related to the previously announced CVA and lease surrenders and the working capital outflow associated with the full closure of the estate on 30 December 2020.
“The group therefore has more than sufficient liquidity resources available to take the company well through 17 May 2021, the date that its estate will be able to commence trading indoors in line with the Government’s phased release of current lockdown measures.
“This assumes no tightening of Government restrictions over that period.
“Previous experience has demonstrated that when the company is able to trade without restriction, targeted for 21 June 2021 in the reopening roadmap, it is highly cash generative and profitable.
“Furthermore, the group anticipates that following easing of restrictions there will be significant pent-up demand and the Group will enjoy a rapid rebound in trading.”
Revolution Bars Group CEO Rob Pitcher said: “With the encouraging progress of the vaccination programme, clarity in the timetable to reopening, and the additional financial support measures announced by the Chancellor, the light at the end of the tunnel is getting brighter.
“Notwithstanding that good news, our industry remains on the critical list and the continued support announced by the Government is required to ensure that we can be in a position to return to growth and be a driver of national job creation once again particularly for young people who are the lifeblood of our industry and who have been severely impacted over the last year.
“We are excited at the prospect of welcoming back our colleagues and guests and providing fun and memorable experiences for them as lockdown restrictions ease.”